Boom, bust, boom—those three four-letter words are used to describe business cycles in economics classrooms. An entrepreneur may instead use “pain” or other, less printable fourletter words to describe the “bust”.
Srikant Sastri, managing director, Solutions Integrated, and director, TeamHR, believes that it was over-ambition that pushed his start-up to the edge of bankruptcy during the bust of 1996-98. Grim determination and a fine balance of hard and soft skills enabled him and his two partners to stay afloat.
When Sastri and friends co-founded their enterprise in 1995, the economy was booming. It seemed natural to expand rapidly since plenty of work was coming in. But when the economy cooled off in 1996-97, they had 80 employees and large overheads. Today, Solutions Integrated and TeamHR employ around 18,000 people and between them, the sister concerns generate a combined turnover of Rs 195 crore. So Sastri has really seen the entire cycle from the sharp end.
The IIT and IIM alumnus quit a cushy Rs 50,000 job in 1995 and literally bet everything he had on establishing a marketing services business. At the nadir, he was surviving on a personal budget of Rs 10 a day. From there, it’s been a gradual progression to the comforts of a South Delhi address. Sastri claims, however, that this roller-coaster ride has given him great satisfaction—perhaps more than he would have ever got from a smooth journey to riches (see Making of an Entrepreneur by Raman Roy).
This son of a chartered accountant from the small town of Ambarnath, Maharashtra, knew early enough that he wanted to be his own boss. But it was a long time before he took the plunge. After completing his MBA, he spent some 10 years working in various marketing segments. At McCann, he realised the potential of marketing services and in 1995, he quit as CEO of the marketing subsidiary of McCann Erickson.
With two former McCann colleagues, Abhinav Dhawan and Kanika Mathur, Sastri launched Solutions Integrated. The company offered a range of marketing services including direct and retail marketing, market research and call centre services. Raising money for this new knowledge business was tough. To fund the initial corpus of Rs 15 lakh, the trio sold personal vehicles, emptied PF accounts and broke into FDs. Sastri’s contribution of Rs 6 lakh left him personally bankrupt.
His wife Sudha, also from IIM-Calcutta, had to bear the household expenses and bring up their five-year-old son by working out of home. Solutions Integrated started with a bang, launching on day one with 40 employees spread across six offices. The initial pay-off was excellent. It soon acquired major clients like Microsoft, Intel, and HP—the new economy and IT orientation was obvious from the beginning. Client loyalty turned out to be a crucial factor as the trio leveraged their contacts. In year two, the new company made the classic error of overextension. As Sastri says, “We turned cocky.” When the economy cooled off, Solutions Integrated was under the gun.
Clients cut marketing spend but overheads couldn’t be reduced. The next two years, they somehow kept things running through a levelheaded strategy that balanced revenue numbers off against the need to maintain employee-motivation and deliver client satisfaction. The money came in a trickle, which was just sufficient to keep it a going concern.
In 1999, with the economy on an upswing, India Inc. went into an expansion mode and income streams from consultancy fees, marketing projects and performancelinked bonuses expanded and stabilised. In 2000, SMIFS, an Indian merchant banker and venture capital firm, took a 20% stake for Rs 2.5 crore infusing fresh capital into the business. In the second boom, it did start a new business, that of sales-force staffing. Contract staffing proved so successful that it led to the creation of a new division, Team4U in 2003. In 2005, this was spun off into a new company, TeamHR.
The current client list includes big names such as Cisco Systems, SAP, NIIT, Citrix Software, Airtel, Siemens, BenQ, Sony, Philips, HLL, ESPN, General Motors and Indiatimes, among others. The IT focus remains. Capital is not a problem anymore. Apart from internal accruals, both firms have big backers. The French Publicis Groupe, which is the global No. 4 in marketing services, holds a 60% stake in Solutions Integrated and Randstad Holding, a European human resource consultancy, has 57% in TeamHR. SMIFS hasn’t sold out either. The promoters hold the remaining equity and continue to manage the businesses without interference.
Despite his penchant for professional risks, Sastri is conservative about personal finances. He made his first major investment when he sold part of his stake and bought a house. Next, there came adequate life insurance cover and provision for the education of his two sons through investments in mutual funds. Through all this, Sudha continued to run her business as usual.
“Her recruitment company with its six employees is quite separate from ours. It’s better to keep your personal and professional lives apart,” says Sastri, who enjoys reading books on history in his spare time. He’s also a budding social activist. Increasing the employability quotient of small-town youth is one of the causes closest to his heart—not surprising given his origins. Sastri will continue as managing director of Solutions Integrated till 2010 and, as a director and consultant with TeamHR until 2008. “I may continue with the same profile or work out something else after this period,” says Sastri. Whatever he decides, the combination of hard and soft skills are likely to stand him in good stead.
(With Rajshree Kukreti)